Tuesday, April 06, 2004

The Power of Free

The Profitability of Free Code "Some thought that open source meant non-commercial or even anti-commercial.' At the time, I wondered how far open source could go and in that posting I identified three criteria for success with open source:
• the user community must be vast
• the product scope must be well defined
• a viable business model must exist.

Today, I think that people are starting to understand that open source is more than just a development approach—it's a business model. What evidence is there to support this? Just follow the money: the OSBC conference was packed with venture capitalists and lawyers; techies were outnumbered ten-to-one. Even long time veterans of the closed source software world, like Ray Lane (previously of Oracle) and Chris Stone of Novell are focused on leveraging the power of open source in their businesses.

And why not? That's the nice thing about capitalism. It has a built-in Darwinian efficiency. If open source allows companies to deliver better products at a cheaper price, then it will be used to do just that. We see many of the most competitive companies in the world, like Amazon, Charles Schwab, Cisco, Corporate Express, FedEx, GE, Merrill Lynch, Motorola, Nokia, Sabre, SAP, and UPS using open source software as a platform for building new applications. Many companies that have been successful with Linux are now looking at deploying an entire open source stack, known as LAMP (Linux, Apache, MySQL, PHP/Perl/Python).

These days, it's easier than ever before for an ambitious developer to download all the software he or she needs to build a product—or even to build a business—on top of commodity hardware and open source software. Some of today's hottest pre-IPO companies, including billion-dollar-babies Salesforce.com and Google, as well as emerging social networking companies like AlwaysOn's Zaibatsu, Friendster, and Tribe.net, are all using open source software."